1968 (10) TMI 95 - HC - VAT and Sales Tax

Commissioner exceeded revision powers under Sales Tax Act, invalidating order

The Court found that the Commissioner of Sales Tax acted illegally in exercising revision powers under section 39(2) of the Madhya Pradesh General Sales ... - Issues Involved:1. Legality of the Commissioner of Sales Tax's exercise of revision powers under section 39(2) of the Madhya Pradesh General Sales Tax Act, 1958.2. Applicability of the Madhya Bharat Sales Tax Act, Samvat 2007, versus the Madhya Pradesh General Sales Tax Act, 1958, for assessment and revision.3. Interpretation and application of section 9(3) of the Central Sales Tax Act, 1956.4. Effect of the repeal of the Madhya Bharat Sales Tax Act by the Madhya Pradesh General Sales Tax Act, 1958, on the rights and liabilities of dealers.5. Application of section 52 of the Madhya Pradesh General Sales Tax Act, 1958, and its savings clause.6. Impact of the Supreme Court decision in Swastik Oil Mills v. H.B. Munshi on the case.7. Relevance of the decision in Commissioner of Sales Tax v. Narain Prasad.Detailed Analysis:1. Legality of the Commissioner of Sales Tax's exercise of revision powers under section 39(2) of the Madhya Pradesh General Sales Tax Act, 1958:The central question was whether the Commissioner of Sales Tax acted illegally in exercising his powers of revision under section 39(2) of the Madhya Pradesh General Sales Tax Act, 1958, in respect of an assessment order dated 28th November, 1961. The assessment related to returns submitted on 30th January, 1958, and 17th June, 1958, and was based on a notice issued on 29th August, 1961. The Commissioner initiated revision proceedings on 30th October, 1964, and revised the assessment on 15th April, 1965, enhancing the dealer's liability.2. Applicability of the Madhya Bharat Sales Tax Act, Samvat 2007, versus the Madhya Pradesh General Sales Tax Act, 1958, for assessment and revision:The dealer contended that the assessment should be governed by section 12(1) of the Madhya Bharat Sales Tax Act, Samvat 2007, which limited the Commissioner's revision powers to two years. The Commissioner and the Tribunal held that the new Madhya Pradesh Act applied, allowing a three-year period for revision. The Court noted that if the Madhya Bharat Act applied, the Commissioner's revision would be invalid as it was made after two years.3. Interpretation and application of section 9(3) of the Central Sales Tax Act, 1956:Section 9(3) of the Central Sales Tax Act, 1956, mandates that Central sales tax is to be assessed, collected, and enforced in the same manner as the State sales tax. The Tribunal assumed that the 'general sales tax law of the appropriate State' included subsequent changes in the law, which the Court accepted for the purpose of this reference.4. Effect of the repeal of the Madhya Bharat Sales Tax Act by the Madhya Pradesh General Sales Tax Act, 1958, on the rights and liabilities of dealers:The Court referred to the Supreme Court's decision in Swastik Oil Mills v. H.B. Munshi, which established that the repeal of a Sales Tax Act does not affect the rights and liabilities under the repealed Act. The Madhya Pradesh General Clauses Act, 1957, supports this principle, indicating that rights and liabilities continue under the repealed Act unless a contrary intention is shown in the new Act.5. Application of section 52 of the Madhya Pradesh General Sales Tax Act, 1958, and its savings clause:Section 52 of the Madhya Pradesh Act, which repeals the Madhya Bharat Act, incorporates its own savings clause, preserving the previous operation of the repealed Acts and any rights or liabilities acquired under them. Sub-section (1-a) of section 52, added by an amendment in 1967, clarifies that a dealer registered under the repealed Acts must be assessed according to those Acts for periods before the commencement of the new Act.6. Impact of the Supreme Court decision in Swastik Oil Mills v. H.B. Munshi on the case:The Court applied the principles from Swastik Oil Mills, concluding that the revision proceedings should be governed by the repealed Madhya Bharat Act. Therefore, the Commissioner's revision powers were limited to two years under section 12(1) of the Madhya Bharat Act, making the revision order invalid as it was issued after the two-year period.7. Relevance of the decision in Commissioner of Sales Tax v. Narain Prasad:The Court noted that the decision in Commissioner of Sales Tax v. Narain Prasad, which held that revisional proceedings should be governed by the new Act, was decided before the addition of sub-section (1-a) to section 52. Therefore, it could not be considered an authority for interpreting section 52 as it now stands.Conclusion:The Court answered the reference in the affirmative, concluding that the Commissioner of Sales Tax acted illegally in exercising his revision powers under section 39(2) of the Madhya Pradesh General Sales Tax Act, 1958, as the assessment should have been governed by the Madhya Bharat Sales Tax Act, Samvat 2007. The revision order was invalid as it was made after the two-year period prescribed by the Madhya Bharat Act.